Our investment process is comprised of four interrelated steps:
Asset Allocation, Manager Selection, Portfolio Construction, and Security Selection.
Asset Allocation focuses on establishing strategic targets and tactical ranges for each of the primary asset classes in the portfolio. The Morgan Creek process develops expected return forecasts for each asset class and then establishes recommended weightings for the appropriate risk tolerances on an ongoing basis.
Our investment committee is comprised of the most senior members of our public and private investment teams. All of the members contribute in making decisions regarding Asset Allocation, Portfolio Construction, and Manager Selection. This same senior team has direct influence on the investment risk parameters that are established for our portfolios. The team encourages spirited debate in which members of the team routinely challenge each other. This iterative process is designed to ensure rigor in our investment process. The process is supervised by the senior members of our investment team who work side-by-side with our Chief Investment Officer, Mark W. Yusko.
Our diligence process is long and thorough. It takes the entire team to address the specified tasks of our diligence process and build our proprietary manager database. Manager due diligence is central to our process, and we estimate that, on an annual basis, members of the investment team engage in more than 4,000 interactions with investment firms each year in order to monitor current managers as well as develop new relationships and identify top-tier talent in each asset class. The public and private analysts review managers as separate teams before bringing the managers to the investment committee, which comprises both the public and private teams. Once managers have passed through the initial screens by our analyst team, a more qualitative evaluation is done by the senior members of our investment team and, finally, our Investment Committee.